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TAR-DISsed: PayPal, PR and Doctor Who

It’s a question of tone: does PayPal’s service come with too many strings attached? Some say their customer service couldn’t be viola. Should they break with Stradition? Or bow to pressure? There’s probably a “luthier” pun in there somewhere, too, but I’m drawing a blank. Suggestions in the comments, please.

Despite a position in e-commerce from the small (handcrafted bangles in off-the-peg web stores) to the stupidly large (Valve Software’s billionaire-making Steam Store), PayPal has been subject to a steady stream of criticism since its purchase by eBay in 2002. In particular there have been complaints about its lengthy terms and conditions, its role in the processing of payments in some cases of fraud, and its customer service.

The case for the defence is, broadly, that PayPal processed $118 billion dollars in payments in 2011, an increase of 29% on the prior year – and that this represents a phenomenal level of complexity and process of payments, of which the unsuccessful or difficult ones are a tiny minority. That it does not perform fractional reserve banking, and therefore should not be expected to behave as a bank does – rather, it is a payment facilitator whose income comes from transaction fees, not interest on investments. And, as the chosen payment method for such a huge number of transactions – including 37% of eBay transactions, it is bound to be the payment method of choice in some fraudulent cases, and can only respond to new cons and grifts as they appear.

Nonetheless, tales of poor service have a long life on the Internet – and when money is on the line, people tend to get emotional. The forums at PayPalsucks.com, chosen as one of Forbes’ most compulsive hate sits as far back as 2005, are still going.

Action, transaction and inaction

One of PayPal’s harshest recent critics has been April Winchell, who as “Helen Killer” manages Regretsy, an often amusing and consistently disquieting showcase of the strangest offerings on the craft site Etsy. This animus comes from Regretsy’s “Secret Santa” program, which intended to collect donations to supply toys to poor children over Christmas.

Unfortunately, the use of the “donate” button (reserved for good cause, although not in fact only for registered charities) and the large number of transactions tripped a switch at PayPal. The account was frozen, along with Winchell’s personal account, and she was instructed to refund a large number of small donations – while PayPal kept the transaction fees.

One on level, PayPal acted appropriately – it blocked a suspicious usage pattern. It’s annoying when a bank freezes your credit card because it didn’t realise you were on holiday, but it is operating to protect your interests as well as its own. However, PayPal, along with the transaction fee issue, apparently failed to provide a satisfactory channel for dialogue, and appeared to be failing to apply its own policies consistently. It got worse when Consumerist, in conversation with Winchell, published choice excerpts from her account of her conversation with PayPal, featuring such customer service no-nos as:

No one above me will even speak to you.

and

We know what you’re up to and we’re done playing games with you.

Winchell already had a large community of followers, and her story rapidly spread to other communities. In the face of escalating bad press, PayPal released the block on the accounts (which might otherwise have been frozen for up to 6 months) and made a donation to the campaign.

But damage, reputationally, had been done, and Winchell has since acted as an amplifier for other complaints – such as the case of the seller of a violin whose recipient contested the accuracy of its label. PayPal’s stipulation that he would in order to receive his refund have to destroy the violin, although understandable as a one-size-fits-all precaution against scammers seeking to keep an item without paying, produced the rather unfortunate image of a vintage musical instrument broken to pieces at their behest. It’s not quite a pile of burning books, but in PR terms it’s not great.

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